Previous work has shown that patients with aplastic anemia have an elevated number of activated suppressor lymphocytes (cell surface phenotype Leu 2+, Tac+, HLA-DR+) that overproduce gamma-interferon (g-IFN), the lymphokine responsible for hematopoietic suppression in vitro, and possibly in vivo. Molecular characterization of T cell antigen receptor gene rearrangements has shown that the abnormal suppressor cell population is not clonal in origin. The inhibitory otential of interferons was further clarified by the use of pure recombinant interferons (r-IFNs). Though r-IFNs directly inhibited hematopoietic progenitor cells, the synergy between small amounts of gamma interferon and increasing amounts of alpha interferon required the presence of auxiliary cells. The antibody specificities in ATG and ALG were evaluated to better define these preparations. Both ATG and ALG were found to contain antibodies directed against several T cell antigens; however no significant differences were seen between active ATG and ALG lots and an ALG lot with less activity in vivo. Lymphocyte subsets and lymphokine production from aplastic anemia patients were studied pre- and post-ATG. Though there was not a significant change in total or suppressor lymphocytes after ATG, the number of lymphocytes bearing the interleukin 2 receptor fell to the normal range in all patients who responded to therapy; in contrast, 60% of nonresponders still had increased Tac antigen expression. In 3 patients studied, this decrease occurred on suppressor but not helper lymphocytes. Interferon levels in the peripheral blood and bone marrow sera decreased in 8/9 patients; the 1 patient without a decrease was a nonresponder. These results are consistent with the hypothesis that some cases of aplastic anemia are caused by an abnormal population of activated suppressor cells which are eliminated after ATG therapy.